March 1, 2022 6 min to read

The Cost of Losing Software Engineers: Why Businesses Should Care and What Can Be Done

Don't lose engineering talent

The use of software has become ubiquitous in modern business, and software engineers play a critical role in developing and maintaining these systems. However, retaining software engineers can be challenging for many organisations, with increasing numbers of engineers leaving their positions for various reasons. This article explores the top reasons why software engineers leave businesses and the negative impacts their departure can have. It also provides insights into why you should care about retaining your software engineers and offers multiple strategies to help your organisation improve.

🏃‍♀ Why do engineers leave a business?

This article “More software engineers are going? Here’s Why and How to prevent that from happening to your team” references data from Payscale’s Compensation Best Practices Report, which surveyed engineers on why they were leaving organisations. The doughnut chart below shows the results of that survey question. The top reasons were Career Advancement Issues (31.5%), Pay and Benefits (22.4%), and Lack of Fit (20.2%).

1. Career Advancement Issues: This refers to situations where software engineers believe they are not allowed to develop their skills or progress in their careers. This could be due to a lack of clear career development paths or opportunities for growth. Software engineers are typically very motivated to learn and improve their skills continuously. If they feel that they are not being given a chance to do so, they may become frustrated and seek opportunities elsewhere.
2. Pay and Benefits: Compensation is a significant factor in attracting and retaining top talent, and software engineers are no exception. Software engineer roles are paid competitively, so it is common for people to look for alternative employment if they are not being fairly compensated for their skills and experience. Companies unwilling to pay their employees their market value may find it difficult to retain talented software engineers.
3. Lack of Fit: This could be regarding company culture or the company’s values not aligning with their own - perhaps the people or culture of their immediate team or the engineering department. Software engineers are very passionate about their work, and if they feel that they are working in an environment that does not support their values or goals, they may seek a more compatible workplace. Additionally, it could be that software engineers do not have a good working relationships with their colleagues or managers. In that case, this can also contribute to a lack of fit and a desire to leave the company.

🤔 Why should you care about retention?

Losing an engineer can have a significant impact on a business, both in the short and long term. Here are a few reasons why you should care about retaining your software engineers:

Morale: When an engineer leaves a business, it can damage morale and motivation among the remaining team members. When a valued team member leaves, the team can face uncertainty and anxiety, leading to decreased productivity and a decline in the quality of work.

Disruption: Leavers can impact the team’s ability to deliver requirements, damaging the company’s reputation and affecting future business opportunities.

Reputational damage: It can damage the company’s reputation in several ways - mainly when the work culture is less than ideal. Firstly, former employees may leave negative reviews on sites like Glassdoor, which can impact the company’s ability to attract top talent in the future. These negative reviews may deter potential customers or partners from doing business with the company. Additionally, when engineers leave due to company or team culture issues, they may speak negatively about their experience to their network, including current or potential clients or partners. This negative word-of-mouth can be damaging to the company’s reputation, and it may take time and effort to repair any damage that has been done.

Costs of hiring and training new engineers: High costs are associated with recruiting and training a replacement. Recruiting and interviewing candidates can be time-consuming and expensive, especially considering the potential costs of missed opportunities and lost productivity. The work is complex and requires a significant understanding of technical and business contexts. Once a new engineer is hired, it can take several months for them to become fully productive. During this time, they may require additional support and training, further impacting the team’s productivity. This cost only increases if the new engineer is not onboarded correctly or if they do not perform adequately.

Missed potential: If they’re leaving due to career advancement issues, you’re missing out on an individual’s potential and current skills. It’s hard to quantify this impact, but you will likely need to recruit your senior team members externally if you lose people before they can progress.

💡 How can an organisation retain more software engineers?

To address the three main reasons software engineers leave a business – career advancement issues, pay and benefits, and lack of fit – businesses can make improvements to retain their top talent. Here are some improvement areas organisations can target:

• Career Paths and Advancement Opportunities: Provide clear career paths and advancement opportunities for software engineers
• Competitive Compensation: Offer competitive salaries and benefits packages - consider bonuses and incentives but above all, ensure pay is fair and, wherever possible, transparent
• Professional Development: Provide mentoring, coaching, and training for ongoing professional growth
• Interest-Driven Projects: Provide opportunities for engineers to work on projects that align with their interests and passions
• Collaboration and Cross-Functional Teams: Encourage collaboration and cross-functional teams to gain exposure to different areas of the business
• Listen to your engineers: Engage directly with individual engineers to ensure they enjoy their work, feel supported by their team and share opinions on general ways of working and engineering principles

Furthermore, consider these additional areas for better employee engagement in general:

• Diversity and Inclusion: Ensure teams are diverse, including women and underrepresented minorities
• Flexible Work Arrangements: Offer remote work and flexible schedules
• Open Communication: Encourage open and honest communication between team members and leadership
• Employee Feedback: Conduct regular surveys and feedback sessions to identify areas for improvement and gather insights
• Culture of Innovation: Foster a culture that encourages experimentation and risk-taking, values creativity, and rewards innovation

By making these improvements, businesses can create a work environment that supports and engages software engineers, improving retention and reducing the costs associated with turnover.

📝 Summary

Retaining software engineers can be a challenge for many companies. Losing software engineers can cost the business financially and affect morale and reputation. Keeping staff for longer can lead to increased productivity and higher-quality work. Payscale’s Compensation Best Practices Report has shown that the top three reasons software engineers leave businesses are career advancement issues, pay and benefits, and lack of fit. Organisations can focus on several improvement areas to retain top talent, including providing clear career paths and professional development opportunities, competitive pay and benefits, and positive and inclusive work culture.